00. IFC (p1-2) 87739 chairman’s letter CCT Tech International Limited 3 FINANCIAL HIGHLIGHTS Six...

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c h a i r m a n ’ s l e t t e r

3C C T T e c h I n t e r n a t i o n a l L i m i t e d

FINANCIAL HIGHLIGHTS

Six months ended 30 June

2007 2006HK$ million (Unaudited) (Unaudited)

Revenue 1,562 1,873

Profit/(loss) for the period (56) 73

CHAIRMAN’S LETTER

On behalf of the board of CCT Tech International Limited, I am pleased to announce the interimresults of the Group for the six months ended 30 June 2007.

The financial period under review was the most challenging and difficult period the Group hadever endured since its group restructuring in 2002. Due to the slowing US economy, keen marketcompetition and acute shortage of labour in our Guangdong factories, the Group’s turnover for thesix months ended 30 June 2007 dropped by 16.6% to HK$1,562 million. As a result of the difficultbusiness environment, high material prices and the continued increase in the labour and otherproduction costs of our Guangdong factories, the Group reported a loss of HK$56 million for thesix months ended 30 June 2007, as compared to a profit of HK$73 million in the correspondingprevious period. Excluding the expense of HK$13 million relating to the granting of share optionsin June 2007, loss attributable to shareholders would have been approximately HK$43 million forthe period.

INTERIM DIVIDEND

In order to conserve cash for ongoing business operations and future growth, the directors do notrecommend payment of an interim dividend for the six months ended 30 June 2007 (30 June 2006:nil).

REVIEW OF OPERATIONS

During the period under review, the business environment worsened considerably and had anadverse impact on our performance. The downturn of the US property market served to dampenthe US economy and consumer spending. In Europe, the market suffered from excess inventory.The combined impact of such factors meant that in the first half of the year, orders from these twokey markets slowed down. On the other hand, the acute shortage of labour in the Guangdong

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Province became even more severe and adversely affected the production output of ourGuangdong factories. As a result of these adverse factors, turnover decreased by 16.6% fromHK$1,873 million for the six months ended 30 June 2006 to HK$1,562 million for the six monthsended 30 June 2007.

Despite the adverse business environment, the Group continued to maintain its leading position asthe world’s largest ODM manufacturer of cordless phones in terms of volume. The Group hascontinued to extend its reach to new customers and expand its geographical footprint to emergingmarkets. We have further strengthened our relationship with all existing customers. Our closealliance with global renowned brand-name companies provides a solid foundation for futuregrowth.

In the first half of the year, our key products of 2.4GHz and 5.8GHz cordless phones and DECTcordless phones continued to sell well. As we mentioned in our 2006 annual report, the Group isthe first manufacturer to launch DECT 6.0 models in the US market. In the first half of the year,the sales of DECT 6.0 models witnessed further growth and we believe that these products willbecome the mainstay telecommunication products in the US market.

The Group has always ranked innovation as a core element of its overall business strategy. Manyinnovative hi-tech products including VoIP cordless phones, WiFi phones, cordless phones withSkype feature and broadband cordless phones have been developed by our R&D teams and will berolled out in the next few months and in 2008. Other than the consumer telecom products market,we have been actively pursuing business opportunities in the commercial communications market.Our innovative SOHO products, multi-line cordless phones and cordless conference box systemwill be launched in the near future. We believe that the in roads made into the commercial marketwill open up many business opportunities for future growth and increased profitability.

The Group recorded a loss of HK$56 million in the first half of the year due to a number ofadverse factor. Firstly, fierce competition in the consumer telecom products market has led to ourcustomers demanding ever more competitive prices for our products making it increasinglydifficult for us to maintain the margin levels we enjoyed in previous years. The Group’s strategyof developing high margin hi-tech products has, however, helped to mitigate some of the pressurein this regard. Secondly, prices of materials and components rose sharply due to a buoyant Chineseeconomy and high oil prices (which affects prices of plastic resins). With keen competition,however, we were unable to pass on the increase in material costs to consumers by increasing ourselling prices. Thirdly, the continued shortage of labour and electricity in the Guangdong Provincefurther worsened which had a major adverse impact on the production output of our factories inthis area. In the first half of the year, we were not able to hire and retain enough workers tooperate on an optimum level and labour turnover rate was high. As a result, production efficiency



suffered and certain customer’s orders were cancelled or delayed. In order to retain and hireadditional workers, the Group has significantly increased the wage levels of workers in ourGuangdong factories. The increase in the wages of workers has, in turn, raised the productioncosts of the Group thereby affecting the Group’s profitability. The increase of production costs inour Guagndong factories due to the above factors and further fueled by the appreciation of theRenminbi have combined to exert considerable pressure on the Group’s profit margins, resulting ina first operating loss since the Group acquired the telecom product business from CCT Telecom in2003.

The impact of the production issues mentioned above would have been higher had the Groupfailed to implement various measures to control costs, improve efficiency and enhance its level ofproduction automation. To resolve the production issues in the long term, the Group has alreadybuilt new production facilities in Chaoyang City, Liaoning Province. The first phase of the newChaoyang factory has already opened and commenced trial production in June 2007. We expectthe production of the new factory in Chaoyang to ramp up early next year. We expect that our newfactory in Chaoyang will contribute towards easing the production issues of our Guangdongfactories by delivering significant costs savings to the Group thereby improving the Group’sprofitability in the coming years.

DISPOSAL OF CCT TECH SHARES

As noted in the 2006 annual report, an indirect subsidiary of CCT Telecom sold in total13,800,000,000 shares in the Company to Deutsche Bank and three other third party investors inMay 2006 in order to restore the public float of the Company. Put options have been granted byCCT Telecom to Deutsche Bank in respect of such shares sold. In the first half of the year,Deutsche Bank and the three investors sold in total 13,426,000,000 shares in the Company to otherpublic investors on the stock market and the said put options in relation to the shares sold byDeutsche Bank and the three investors have been cancelled.

During the period from 28 May 2007 to 1 June 2007, CCT Telecom, through its wholly-ownedsubsidiary, sold a total of 15,009,360,000 shares (the “Shares Sale”) in the Company on the stockmarket. As a result of the Shares Sale, the CCT Telecom Group’s shareholding in the Companydropped to approximately 51% as at 30 June 2007.

OUTLOOK

The outlook of the US economy is uncertain. It is believed that the worst of the US propertymarket has yet to come and there appears to be no immediate signs of recovery. The subprime loancrisis has resulted in world-wide credit jitters which has hit global financial markets. As a result,

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the US economy has slowed down and consumer spending has dampened. We anticipate that thebusiness environment in the second half of the year will remain difficult with no immediate signsof improvement. We also anticipate that the continued production issues and rise in costs and theprobable further appreciation of Renminbi will remain our key challenges and affect theprofitability of the Group. However, the Group will continue to strengthen R&D capabilities todevelop and roll out high margin hi-tech advance products to remain competitive. Our strongassociation with major brand-name companies and our successful expansion into the commercialcommunication market and new and emerging markets will provide us with a solid platform forgrowth in revenue and profitability. We expect that the new Chaoyang factory will ease labourconstraints of our Guangdong factories and will deliver significant cost savings. We are confidentthe Group will weather-out the current difficult business environment.

ACKNOWLEDGEMENTS

On behalf of the Board, I would like to take this opportunity to express our appreciation andgratitude to the senior management and all staff for their support, hard work and dedication overthe years. We would also like to express our sincere thanks to our shareholders, bankers, investors,customers and suppliers for their continued encouragement and strong support to the Group.

Mak Shiu Tong, ClementChairman

Hong Kong, 19 September 2007

f i n a n c i a l r e v i e w


HIGHLIGHTS ON FINANCIAL RESULTS


2007 2006 Increase/HK$ million (Unaudited) (Unaudited) % (decrease)

Revenue 1,562 1,873 (16.6%)

Profit/(loss) for the period (56) 73 N/A

DISCUSSION ON FINANCIAL RESULTS

Turnover of the Group for the six months ended 30 June 2007 amounted to HK$1,562 millionwhich represents a decrease of approximately 16.6% as compared to the corresponding period. Thedecrease in turnover was caused mainly by decrease of customers’ orders, reduction of averageselling prices of products and cancellation of certain orders and delay of shipments due to shortageof labour.

The Group reported a loss of HK$56 million for the period ended 30 June 2007, as compared to aprofit of HK$73 million in previous corresponding period. The loss for the six months ended 30June 2007 was due to the combined effects of reduction of average selling prices of products, highmaterial prices, rise in wages for workers in our Guangdong factories, and appreciation ofRenminbi. Excluding the expense of HK$13 million relating to the granting of share optionsduring the six months ended 30 June 2007, loss would have been approximately HK$43 million.

ANALYSIS BY BUSINESS SEGMENT

Operatingprofit/(loss) before

corporate and others,Turnover finance costs and tax

2007 2006 2007 2006HK$ million (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Telecom and electronic products 1,562 1,873 (21) 96

During the period under review, Group’s turnover and operating result was derived from themanufacture and sale of telecom and electronic products. The Group reported an operating loss ofapproximately HK$21 million for the six months ended 30 June 2007, as compared to an operatingprofit of HK$96 million in previous corresponding period, mainly due to the reduction of averageselling prices of products and significant increase in production costs.

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ANALYSIS BY GEOGRAPHICAL SEGMENT

Turnover

2007 2006Amount Relative Amount Relative % increase/

HK$ million (Unaudited) % (Unaudited) % (decrease)

US 802 51.3% 1,045 55.8% (23.3%)Asia Pacific Region 535 34.3% 468 25.0% 14.3%Europe 225 14.4% 360 19.2% (37.5%)

Total 1,562 100.0% 1,873 100.0% (16.6%)

The US market remained the largest market of the Group, accounting for approximately 51.3%(corresponding period: 55.8%) of the Group’s turnover in the first half of the year. The drop in oursales to US market was mainly due to the decrease in customers’ orders stemming from aweakened economy, the fall in the average selling price and the shortage of labour in ourGuangdong factories which affected our production. The sales to Asia Pacific region accounted forapproximately 34.3% (corresponding period: 25.0%) of the Group’s turnover, reporting a growthof 14.3%. As a result of excess inventory of the European market, our sales to Europe marketdecreased by 37.5% and contributing approximately 14.4% (corresponding period: 19.2%) of theGroup’s total turnover.

HIGHLIGHTS ON FINANCIAL POSITION

30 June 31 December2007 2006

HK$ million (Unaudited) (Audited) % increase

Non-current assets 863 844 2.3%Inventories 273 191 42.9%Financial asset at fair value through

profit or loss 5 — N/ACash and cash equivalents 504 470 7.2%Non-current liabilities 51 33 54.5%Shareholders’ funds 1,196 1,182 1.2%



DISCUSSION ON FINANCIAL POSITION

Total non-current assets increased by approximately 2.3% during the period, attributable mainly tothe additions of machinery, toolings, moulds for the existing Guangdong factories and for the newChaoyang factory and the capitalization of deferred development costs during the period offset bythe depreciation of fixed assets and the amortisation of the deferred development costs.

Inventory increased by 42.9% due to seasonal factor as raw materials were accumulated to preparefor production peak season.

Financial asset at fair value through profit or loss as at 30 June 2007 represents our investment inequity-linked deposits in order to earn a higher yield return from the surplus fund.

Increase in cash and cash equivalents was mainly attributable to cash generated from operationsand the cash receipts from the exercise of share options during the six months ended 30 June 2007.

Non-current liabilities increased by approximately 54.5% to HK$51 million as at 30 June 2007.The increase in non-current liabilities was mainly due to the new bank loans raised to fund capitalexpenditure and working capital for our manufacturing operations.

Shareholders’ funds increased from HK$1,182 million to HK$1,196 million as at 30 June 2007arising from the issue of new shares from the exercise of share options and partly offset by the lossattributable to the equity holders of the Company during the first half of the year.

CAPITAL STRUCTURE AND GEARING RATIO

30 June 2007 31 December 2006Amount Relative Amount Relative

HK$ million (Unaudited) % (Audited) %

Bank loans 297 20% 200 15%Finance lease payable 1 — 1 —

Total borrowings 298 20% 201 15%Equity 1,196 80% 1,182 85%

Total capital employed 1,494 100% 1,383 100%

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The Group’s gearing ratio increased to approximately 20% as at 30 June 2007 (31 December 2006:15%) as a result of the raising of new bank loans to finance capital expenditure and workingcapital for our manufacturing operations. After taking into account the cash on hand, the Groupdid not have any net borrowings and in fact had a positive net cash balance.

The Group’s outstanding bank borrowings amounted to approximately HK$297 million as at 30June 2007 (31 December 2006: HK$200 million). Amongst the total outstanding bank borrowings,HK$48 million was repayable within two to five years. The balance of HK$249 million wasarranged on a short-term basis for ordinary business operations and was repayable within one year.

Acquisition of certain of the Group’s assets was financed by way of finance leases and the totaloutstanding finance lease payables for the Group as at 30 June 2007 amounted to approximatelyHK$1 million (31 December 2006: HK$1 million).

As at 30 June 2007, the maturity profile of the bank and other borrowings of the Group falling duewithin one year and in the second to the fifth year amounted to HK$250 million and HK$48million, respectively (31 December 2006: HK$172 million and HK$29 million, respectively).There was no material effect of seasonality on the Group’s borrowing requirements.

LIQUIDITY AND FINANCIAL RESOURCES


HK$ million (Unaudited) (Audited)

Current assets 1,715 1,591Current liabilities 1,331 1,220

Current ratio 129% 130%

Current ratio as at 30 June 2007 maintained at a healthy level of 129% (31 December 2006:130%). As at 30 June 2007, the Group’s cash balance amounted to HK$588 million (31 December2006: HK$553 million), of which HK$84 million (31 December 2006: HK$83 million) waspledged for general banking facilities. Almost all of the Group’s cash was placed on deposits withlicensed banks in Hong Kong. The strong cash balance plus the cash generated from the Group’soperations and funds available from the bank facilities are expected to be sufficient to cover allcash requirements, including working capital and capital expenditure needs.



CAPITAL EXPENDITURE AND COMMITMENTS

During the period under review, the Group incurred capital expenditure amounted toapproximately HK$68 million, including the expenditure of approximately HK$33 million foradditions of production facilities in the PRC and approximately HK$35 million for purchase oftools, moulds, plant and machinery and furniture and office equipment of the Group.

As at 30 June 2007, capital commitment contracted by the Group but not yet provided for in theaccounts amounted to approximately HK$35 million (31 December 2006: HK$33 million), whichwas mainly related to the capital expenditure in relation to the manufacturing operations. Thecapital commitment will be funded by internal resources.

TREASURY MANAGEMENT

The Group employs a conservative approach to cash management and risk control. To achievebetter risk control and efficient fund management, the Group’s treasury activities are centralised.

During the period under review, the Group’s receipts were mainly denominated in US dollars, withsome in Hong Kong dollars and the Euros. Payments were mainly made in Hong Kong dollars, USdollars and Renminbi and some made in Euros. Cash was generally placed in short-term depositsdenominated in Hong Kong dollars and US dollars. The Group’s borrowings were principallymade on floating rate basis.

The objective of the Group’s treasury policies is to minimise risks and exposures due to thefluctuations in foreign currency exchange rates and interest rates. The Group does not have anysignificant interest rate risk, as both the borrowings of the Group and the interest rates currentlyremain at low levels. In terms of foreign exchange exposures, the Group is principally exposed totwo major currencies, namely the US dollar in terms of receipts and the Renminbi in terms of theproduction costs (including mainly wages and overhead) in China. For US dollar exposure, sincethe Hong Kong dollar remains pegged to the US dollar, the exchange fluctuation is not expected tobe significant. In addition, as most of the Group’s purchases are also made in US dollars, whichare to be paid out of our sales receipts in US dollars, the management considers that the foreignexchange exposure risk for the US dollar is not material.

For Renminbi exposure, as our wages and overheads in our factories in China are paid inRenminbi, our production costs will be increased by the possible further appreciation of Renminbi.Any further appreciation of the Renminbi in future will be of concern to all manufacturers withmanufacturing facilities in China.

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ACQUISITIONS AND DISPOSALS OF MATERIAL SUBSIDIARIES ANDASSOCIATES

The Group did not acquire or dispose of any material subsidiaries and associates during the periodunder review.

SIGNIFICANT INVESTMENT

The Group did not hold any significant investment as at 30 June 2007 (31 December 2006: Nil).

PLEDGE OF ASSETS

As at 30 June 2007, certain of the Group’s assets with net book value of HK$520 million (31December 2006: HK$516 million) and time deposits of approximately HK$84 million (31December 2006: HK$83 million) were pledged to secure general banking facilities granted to theGroup.

CONTINGENT LIABILITIES

As at 30 June 2007, the Group had contingent liability in respect of possible future long servicepayments to employees amounted to approximately HK$0.3 million (31 December 2006: HK$0.3million). Save as aforesaid, the Group did not have any other significant contingent liabilities as at30 June 2007.

EMPLOYEES AND REMUNERATION POLICY

The total number of employees of the Group as at 30 June 2007 was 17,835 (31 December 2006:14,380). Remuneration packages are normally reviewed on an annual basis. Apart from salarypayments, other staff benefits include provident fund contributions, medical insurance coverageand performance related bonuses. Share options may also be granted to eligible employees andpersons of the Group. As at 30 June 2007, there were outstanding share options of approximately513 million share options (31 December 2006: Nil).

i n t e r i m r e s u l t s


The Board of the Company is pleased to announce the unaudited consolidated results of the Groupfor the six months ended 30 June 2007 together with the comparative figures for the correspondingperiod in 2006 as follows:

CONDENSED CONSOLIDATED INCOME STATEMENTFor the six months ended 30 June 2007


2007 2006HK$ million Notes (Unaudited) (Unaudited)

REVENUE 3 1,562 1,873Cost of sales (1,508) (1,710)

Gross profit 54 163Other income and gains 3 12 22Selling and distribution costs (21) (23)Administrative expenses (70) (64)Equity-settled share option expenses (13) —Other expenses (7) (11)Finance costs (7) (6)

PROFIT/(LOSS) BEFORE TAX 4 (52) 81Tax 5 (4) (8)

PROFIT/(LOSS) FOR THE PERIOD (56) 73

DIVIDEND 6 — —

EARNINGS/(LOSS) PER SHAREATTRIBUTABLE TO EQUITY HOLDERSOF THE PARENT 7— Basic (0.087 cents) 0.24 cents

— Diluted N/A 0.11 cents

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CONDENSED CONSOLIDATED BALANCE SHEET30 June 2007


HK$ million Notes (Unaudited) (Audited)

NON-CURRENT ASSETSProperty, plant and equipment 577 556Investment properties 178 178Prepaid land lease payments 49 50Goodwill 22 22Other intangible assets 36 36Deferred tax assets 1 2

Total non-current assets 863 844

CURRENT ASSETSInventories 273 191Trade and bills receivables 9 815 822Prepayments, deposits and other receivables 34 25Financial assets at fair value through

profit or loss 5 —Pledged time deposits 84 83Cash and cash equivalents 504 470

Total current assets 1,715 1,591

CURRENT LIABILITIESTrade and bills payables 10 957 929Tax payable 10 9Other payables and accruals 114 110Interest-bearing bank loans and

other borrowings 250 172

Total current liabilities 1,331 1,220

NET CURRENT ASSETS 384 371

TOTAL ASSETS LESS CURRENTLIABILITIES 1,247 1,215



CONDENSED CONSOLIDATED BALANCE SHEET (Continued)30 June 2007


HK$ million Notes (Unaudited) (Audited)

NON-CURRENT LIABILITIESInterest-bearing bank loans, secured 48 29Deferred tax liabilities 3 4

Total non-current liabilities 51 33

Net assets 1,196 1,182

EQUITYEquity attributable to equity holders

of the parentIssued capital 11 654 644Reserves 542 538

Total equity 1,196 1,182

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 30 June 2007

Attributable to equity holders of the parent

Equity

Share Share component ofIssued premium Capital option convertible Accumulated

capital account reserve reserve notes losses Total

HK$ million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

At 1 January 2007 644 182 733 — — (377) 1,182

Equity-settled share

option arrangement — — — 13 — — 13Issue of new shares

upon exercise of

share options 10 56 — (9) — — 57Loss for the period — — — — — (56) (56)

At 30 June 2007 654 238 733 4 — (433) 1,196

At 1 January 2006 159 4 733 — 7 (477) 426

Issue of new shares

upon conversion ofconvertible notes 485 176 — — (7) 1 655

Profit for the period — — — — — 73 73

At 30 June 2006 644 180 733 — — (403) 1,154



CONDENSED CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 June 2007



NET CASH INFLOW/(OUTFLOW) FROMOPERATING ACTIVITIES (46) 30

NET CASH OUTFLOW FROM INVESTINGACTIVITIES (74) (84)

NET CASH INFLOW/(OUTFLOW) FROMFINANCING ACTIVITIES 154 (40)

NET INCREASE/(DECREASE) IN CASH ANDCASH EQUIVALENTS 34 (94)

Cash and cash equivalents at beginning of period 470 419

CASH AND CASH EQUIVALENTSAT END OF PERIOD 504 325

ANALYSIS OF BALANCES OF CASH ANDCASH EQUIVALENTSCash and bank balances 338 308Non-pledged time deposits with original maturity

of less than three months when acquired 166 17

504 325

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NOTES TO CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements have been prepared inaccordance with the applicable disclosure requirements of Appendix 16 to the RulesGoverning the Listing of Securities on the Stock Exchange of Hong Kong Limited (the“Listing Rules”) and with Hong Kong Accounting Standards (“HKAS”) 34 “Interimfinancial reporting” issued by the Hong Kong Institute of Certified Public Accountants(“HKICPA”).

The unaudited condensed consolidated interim financial statements should be read inconjunction with the audited annual financial statements of the Group for the year ended 31December 2006.

2. PRINCIPAL ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the consolidated financialstatements for the year ended 31 December 2006.

The following new standards, amendments to standards and interpretations are relevant tothe Group and are mandatory for financial year ending 31 December 2007.

HKAS 1 Amendment Capital DisclosuresHKFRS 7 Financial Instruments: DisclosuresHK(IFRIC)-Int 7 Applying the Restatement Approach under HKAS29

Financial Reporting in Hyperinflationary EconomicsHK(IFRIC)-Int 8 Scope of HKFRS 2HK(IFRIC)-Int 9 Reassessment of Embedded DerivativesHK(IFRIC)-Int 10 Interim Financial Reporting and Impairment

The adoption of these new standards, amendments to standards and interpretations has nosignificant impact on the Group interim results and financial position.



2. PRINCIPAL ACCOUNTING POLICIES (Continued)

The Group has not early applied the following new HKFRSs that have been issued but arenot yet effective. The Group has commenced considering the potential impact of these newHKFRSs. The management anticipates the application of theses new HKFRSs will have nomaterial impact on the results of operations and financial position of the Group.

HKAS 23 (Revised) Borrowing Costs1

HKFRS 8 Operating Segments1

HK(IFRIC)-Int 11 HKFRS 2 — Group and Treasury Share Transactions2

HK(IFRIC)-Int 12 Service Concession Arrangements3

1 Effective for annual periods beginning on or after 1 January 2009

2 Effective for annual periods beginning on or after 1 March 2007

3 Effective for annual periods beginning on or after 1 January 2008

3. SEGMENT INFORMATION

Segment information is presented by way of two segment formats: (i) on a primary segmentreporting basis, by business segment; and (ii) on a secondary segment reporting basis, bygeographical segment.

The Group’s operating businesses are structured and managed separately according to thenature of their operations and the products and services they provide. Each of the Group’sbusiness segments represents a strategic business unit that offers products and serviceswhich are subject to risks and returns that are different from those of other businesssegments. Summary details of the business segments are as follows:

(a) the telecom and electronic products segment engages in the manufacture and sale oftelecom and electronic products and accessories; and

(b) the corporate and others segment comprises corporate income and expenses items.

In determining the Group’s geographical segments, revenues and results are attributed tothe segments based on the location of the customers.

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3. SEGMENT INFORMATION (Continued)

(a) Business segments

The following table presents revenue and profit/(loss) for the Group’s businesssegments for the period ended 30 June 2007 and 2006.

Telecom andelectronic products Corporate and others Total

2007 2006 2007 2006 2007 2006HK$ million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Segment revenue:Sales to external

customers 1,561 1,873 — — 1,561 1,873Other revenue 12 22 — — 12 22

Total revenue 1,573 1,895 — — 1,573 1,895

Segment results (21) 96 (25) (9) (46) 87

Interest income 1 —Finance costs (7) (6)

Profit/(loss) before tax (52) 81Tax (4) (8)

Profit/(loss) for the period (56) 73



3. SEGMENT INFORMATION (Continued)

(b) Geographical segments

The following tables present revenue information for the Group’s geographicalsegments for the period ended 30 June 2007 and 2006.

2007

United Statesof America Asia Pacific Europe Total

HK$ million (Unaudited) (Unaudited) (Unaudited) (Unaudited)


customers 802 534 225 1,561Other revenue — 12 — 12

Total revenue 802 546 225 1,573

2006

United Statesof America Asia Pacific Europe Total

HK$ million (Unaudited) (Unaudited) (Unaudited) (Unaudited)


customers 1,045 468 360 1,873Other revenue — 22 — 22

Total revenue 1,045 490 360 1,895

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4. PROFIT/(LOSS) BEFORE TAX

The Group’s profit/(loss) before tax is arrived at after charging:



Cost of inventories sold 1,508 1,710Depreciation 47 44Amortisation of prepaid land lease payments 1 1Amortisation of deferred development costs 18 22Write off of deferred development costs 7 8

5. TAX



Current — Hong Kong 2 4Current — Elsewhere 2 5Deferred — (1)

Total tax charge for the period 4 8

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on theestimated assessable profits arising in Hong Kong during the period. Taxes on profitsassessable elsewhere have been calculated at the rates of tax prevailing in the countries inwhich the Group operates, based on existing legislation, interpretations and practices inrespect thereof.

Certain PRC subsidiaries of the Group, which are categorised as wholly-foreign-ownedenterprises, are entitled to preferential tax treatments including full exemption from thePRC income tax for two years starting from the first profit-making year, followed by a 50%reduction for the next three consecutive years.



6. DIVIDEND

The directors do not recommend payment of an interim dividend for the six months ended30 June 2007 (30 June 2006: nil).

7. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITYHOLDERS OF THE PARENT

The calculation of basic earnings/(loss) per share amounts is based on the profit/(loss) forthe period attributable to ordinary equity holders of the parent, and the weighted averagenumber of ordinary shares in issue during the period.

The calculation of diluted earnings/(loss) per share amounts is based on the profit/(loss) forthe period attributable to ordinary equity holders of the parent. The weighted averagenumber of ordinary shares used in the calculation is the ordinary shares in issue during theperiod, as used in the basic earnings per share calculation and the weighted average numberof ordinary shares assumed to have been issued at no consideration on the deemed exerciseor conversion of all dilutive potential ordinary shares into ordinary shares.

Dilutive loss per share amount based on loss for the period ended 30 June 2007 has notbeen disclosed as share options outstanding in current period has an anti-dilutive effect onthe basic loss per share amount for current period.

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7. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITYHOLDERS OF THE PARENT (Continued)

The calculation of the basic and diluted earnings/(loss) per share are based on:



Earnings/(loss)Profit/(loss) attributable to ordinary equity

holders of the parent, used in basic anddiluted earnings/(loss) per share calculation (56) 73

Shares Number of shares

Weighted average number of ordinary sharesin issue during the period used in the basicearnings/(loss) per share calculation 64,470,728,797 30,119,164,472

Effect of dilution-weighted averagenumber of ordinary shares:

Share options 14,342,541 —Convertible notes — 34,247,829,518

64,485,071,338 64,366,993,990

8. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2007, the Group acquired fixed assets ofapproximately HK$68 million (six months ended 30 June 2006: approximately HK$52million) and disposed fixed assets of nil (six months ended 30 June 2006: HK$1 million).



9. TRADE AND BILLS RECEIVABLES

An aged analysis of the trade and bills receivables as at the balance sheet date, based on theinvoice date and net of provisions, is as follows:

30 June 2007 31 December 2006(Unaudited) (Audited)

HK$ million Balance Percentage Balance Percentage

Current to 30 days 270 33 303 3731 to 60 days 235 29 234 2861 to 90 days 194 24 239 29Over 90 days 116 14 46 6

Total 815 100 822 100

The Group allows an average credit period of 30 to 90 days to its trade customers.

10. TRADE AND BILLS PAYABLES

An aged analysis of the trade and bills payables as at the balance sheet date, based on theinvoice date, is as follows:

30 June 2007 31 December 2006(Unaudited) (Audited)

HK$ million Balance Percentage Balance Percentage

Current to 30 days 341 36 245 2631 to 60 days 211 22 234 2561 to 90 days 199 21 186 20Over 90 days 206 21 264 29

Total 957 100 929 100

Included in trade and bills payables are trade payables of HK$126 million (31 December2006: HK$127 million) due to Neptune Holding Limited (“Neptune”) and Electronic SalesLimited (“ESL”), being wholly-owned subsidiaries of CCT Telecom, which are repayablewithin 90 days from invoice date.

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11. SHARE CAPITAL



Authorised:120,000,000,000 ordinary shares of HK$0.01 each 1,200 1,200

Issued and fully paid:65,403,993,990 (31 December 2006:

64,366,993,990) ordinary shares of HK$0.01 each 654 644

A summary of the transactions involving the Company’s issued ordinary share capitalduring the period is as follows:

Number ofordinary shares

of HK$0.01 each Issue capitalin issue HK$ million

At 1 January 2007 64,366,993,990 644Issue of new shares upon exercise

of share options 1,037,000,000 10

At 30 June 2007 65,403,993,990 654

12. CONTINGENT LIABILITIES

The Group had a contingent liability in respect of possible future long service payments toemployees under the Hong Kong Employment Ordinance, with a maximum possible amountof HK$0.3 million as at 30 June 2007 (31 December 2006: HK$0.3 million). The contingentliability have arisen as a number of current employees have achieved the required numberof years of service to the Group in order to be eligible for long service payments under theEmployment Ordinance if their employment is terminated under certain circumstances. Aprovision has not been recognised in respect of such possible payments, as it is notconsidered probable that the situation will result in a material future outflow of resourcesfrom the Group.



13. PLEDGE OF ASSETS

At 30 June 2007, the Group’s bank borrowings were secured by:

(i) pledge of the Group’s fixed deposits amounted to approximately HK$84 million (31December 2006: HK$83 million); and

(ii) fixed charges over certain of the Group’s leasehold land and buildings andinvestment property with an aggregate net book value amounting to approximatelyHK$520 million (31 December 2006: HK$516 million).

14. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases its investment properties under operating lease arrangements withleases negotiated for terms for three years.

At 30 June 2007, the Group had total future minimum lease receivables under non-cancellable operating leases with its tenants falling due as follows:



Within one year 6 6In the second to the fifth year, inclusive 3 6

9 12

28


14. OPERATING LEASE ARRANGEMENTS (Continued)

(b) As lessee

The Group leases certain of its office properties under operating lease arrangements,with leases negotiated for terms ranging from one to three years.

At 30 June 2007, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:



Within one year 3 3In the second to the fifth year, inclusive 1 2

4 5

15. COMMITMENTS

In addition to the operating lease commitments detailed in note 14(b) above, the Group hadthe following capital commitments at the balance sheet date:



Contracted, but not provided for:Construction in progress 23 1Purchase of plant, machinery and equipment 12 32

35 33



16. RELATED PARTY TRANSACTIONS

(a) During the current period, the Group had the following transactions with CCT Telecomand its subsidiaries other than the Group (the “CCT Telecom Remaining Group”):



Fellow subsidiaries:Purchase of plastic casings

and components (i) 137 145Purchase of power supply

components (i) 88 84Factory rental income (ii) 3 3Factory rental expenses (iii) 3 3Office rental expenses (iii) 2 1Sale of consumer electronic

products (iv) 34 —Ultimate holding company:

Management informationsystem service fee (v) 2 2

Notes:

(i) The plastic casings and components and power supply components were purchased by the subsidiariesof the Company from fellow subsidiaries within the CCT Telecom Remaining Group at prices mutuallyagreed between the relevant parties.

(ii) The factory rental income was charged to a fellow subsidiary within the CCT Telecom RemainingGroup for the provision of factory space in Huiyang, at a rate determined in accordance with terms andconditions set out in a tenancy agreement.

(iii) The factory and office rental expenses were charged to the Group by fellow subsidiaries within theCCT Telecom Remaining Group for the provision of factory spaces in Dongguan and office space inHong Kong, at rates determined in accordance with the terms and conditions set out in the tenancyagreements.

(iv) The consumer electronic products were sold to fellow subsidiaries within the CCT Telecom RemainingGroup from the Group at prices determined in accordance with terms and conditions set out in aconsumer electronic products manufacturing agreement.

(v) The management information system service fee was charged to CCT Telecom for the provision ofgeneral management information system support, network and software consultation and hardwaremaintenance services. The rate was determined in accordance with the terms and conditions set out in aMIS agreement.

30


16. RELATED PARTY TRANSACTIONS (Continued)

(b) Compensation of key management personnel of the Group:



Short term employee benefits 11 7Post-employment benefits — —

Total compensation paid to keymanagement personnel 11 7

17. COMPARATIVE ACCOUNTS

Certain comparative figures have been re-classified to conform with the current period’spresentation.

d i s c l o s u r e o f i n t e r e s t s


DIRECTORS’ INTERESTS

As at 30 June 2007, the Directors and the chief executive of the Company and/or any of theirrespective associates had the following interests and short positions in the shares, underlyingshares and debentures of the Company and/or any of its associated corporations (within themeaning of Part XV of the SFO) as recorded in the register required to be kept by the Companyunder section 352 of the SFO or as otherwise notified to the Company and the Stock Exchangepursuant to Part XV of the SFO or the Model Code adopted by the Company:

(A) INTERESTS AND SHORT POSITIONS IN THE SHARES AND THE UNDERLYINGSHARES OF THE SHARE OPTIONS OF THE COMPANY AS AT 30 JUNE 2007

(i) Long positions in the Shares:

Approximatepercentage of

Number of the the total issuedName of the Director Shares held share capital

(%)

Mak Shiu Tong, Clement 120,000,000 0.18Cheng Yuk Ching, Flora 18,000,000 0.03Tam Ngai Hung, Terry 20,000,000 0.03Li Man To, Feynman 12,880,000 0.02

(ii) Long positions in the underlying Shares of the share options of the Company:

Approximate

Date of Exercise Exercise Number of the Number of the percentage of

grant of the period of the price per share options total underlying the total issued

Name of the Director share options share options Share outstanding Shares share capital

HK$ (%)

William Donald Putt 8/6/2007 8/6/2007–7/12/2007 0.055 10,000,000 10,000,000 0.02

Chow Siu Ngor 8/6/2007 8/6/2007–7/12/2007 0.055 10,000,000 10,000,000 0.02

Lau Ho Kit, Ivan 8/6/2007 8/6/2007–7/12/2007 0.055 10,000,000 10,000,000 0.02

Chen Li 8/6/2007 8/6/2007–7/12/2007 0.055 10,000,000 10,000,000 0.02

32


(B) INTERESTS AND SHORT POSITIONS IN THE SHARES AND THE UNDERLYINGSHARES OF THE CONVERTIBLE BONDS OF AN ASSOCIATED CORPORATION —CCT TELECOM AS AT 30 JUNE 2007

(i) Long positions in the shares of CCT Telecom:

Approximate

Number of the shares beneficially held percentage of

and nature of interest the total issued

Name of the Director Personal Family Corporate Total share capital

(%)

Mak Shiu Tong, Clement 715,652 — 238,283,758 238,999,410 29.98

Cheng Yuk Ching, Flora (Note) 14,076,713 120,000 — 14,196,713 1.78

Tam Ngai Hung, Terry 500,000 — — 500,000 0.06

William Donald Putt 591,500 — — 591,500 0.07

Note: Included in the shareholdings in which Ms. Cheng Yuk Ching, Flora was interested, 120,000 shares ofCCT Telecom were held by the spouse of Ms. Cheng Yuk Ching, Flora, who is deemed to be interestedin such shares under the provisions of Part XV of the SFO.

(ii) Long positions in the underlying shares of the convertible bonds of CCTTelecom:

Number Approximateof the total percentage of

Description of underlying the total issuedName of the Director equity derivatives Notes shares share capital

(%)

Mak Shiu Tong, Clement 2010 convertible bonds (1) 29,942,649 3.762009 convertible bonds (2) 26,548,672 3.33



Notes:

(1) The 2010 convertible bonds with an outstanding principal amount of HK$18,085,360 as at 30 June2007, were issued by CCT Telecom to New Capital Industrial Limited (a company controlled by Mr.Mak Shiu Tong, Clement) on 25 April 2005. The 2010 convertible bonds, due on 25 April 2010, areinterest free and convertible into the shares of CCT Telecom at the conversion price of HK$0.604 pershare of CCT Telecom (subject to adjustments according to the terms of the 2010 convertible bonds).

(2) The 2009 convertible bonds with an outstanding principal amount of HK$30,000,000 as at 30 June2007, were issued by CCT Telecom to Capital Winner Investments Limited (a company controlled byMr. Mak Shiu Tong, Clement) on 23 June 2006. The 2009 convertible bonds, due on 23 June 2009, areinterest free and convertible into the shares of CCT Telecom at the conversion price of HK$1.13 pershare of CCT Telecom (subject to adjustments according to the terms of the 2009 convertible bonds).

(C) INTERESTS AND SHORT POSITIONS IN THE SHARES AND THE UNDERLYINGSHARES OF THE SHARE OPTIONS OF AN ASSOCIATED CORPORATION —TRADEEASY AS AT 30 JUNE 2007

(i) Long positions in the shares of Tradeeasy:

None of the Directors had any interest and short position in respect of the shares,debentures, convertible bonds and equity derivatives of Tradeeasy as at 30 June2007.

(ii) Long positions in the underlying shares of the share options of Tradeeasy:

Approximate

Date of Exercise Exercise Number of the Number of the percentage of

grant of the period of the price per share options total underlying the total issued

Name of the Director share options share options share outstanding shares share capital

HK$ (%)

Mak Shiu Tong, 14/8/2006 14/8/2006–13/8/2011 0.038 45,000,000 45,000,000 4.47

Clement

Cheng Yuk Ching, 14/8/2006 14/8/2006–13/8/2011 0.038 5,000,000 5,000,000 0.50

Flora

Tam Ngai Hung, 14/8/2006 14/8/2006–13/8/2011 0.038 28,000,000 28,000,000 2.78

Terry

William Donald Putt 14/8/2006 14/8/2006–13/8/2011 0.038 5,000,000 5,000,000 0.50

34


Save as disclosed above, as at 30 June 2007, none of the Directors and the chief executive of theCompany and/or any of their respective associates had any interest and short position in theshares, underlying shares and debentures of the Company and/or any of its associated corporations(within the meaning of Part XV of the SFO) as recorded in the register required to be kept by theCompany under section 352 of the SFO or as otherwise notified to the Company and the StockExchange pursuant to Part XV of the SFO or the Model Code adopted by the Company.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS

As at 30 June 2007, the following persons had interests or short positions in the Shares orunderlying Shares which would fall to be disclosed to the Company under the provisions ofDivisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to bekept by the Company under section 336 of the SFO:

(I) LONG POSITIONS IN THE SHARES AS AT 30 JUNE 2007:

Approximatepercentage of

Number of the total issuedName of the Shareholder Notes the Shares held share capital

(%)

CCT Telecom (1) 33,026,391,124 50.50CCT Technology Investment Limited (2) 33,026,391,124 50.50Jade Assets Company Limited 29,326,391,124 44.84

Notes:

(1) The interest disclosed represents 33,026,391,124 Shares indirectly owned by CCT Technology InvestmentLimited through the subsidiaries stated in Note (2) below. CCT Technology Investment Limited is a wholly-owned subsidiary of CCT Telecom.

(2) The interest disclosed represents 29,326,391,124 Shares held by Jade Assets Company Limited, 1,350,000,000Shares held by CCT Assets Management Limited, 1,350,000,000 Shares held by Expert Success InternationalLimited and 1,000,000,000 Shares held by Noble Team Investments Limited, all of them are wholly-ownedsubsidiaries of CCT Technology Investment Limited.



(II) LONG POSITIONS IN THE UNDERLYING SHARES OF EQUITY DERIVATIVES OFTHE COMPANY AS AT 30 JUNE 2007:

Number of the total Approximateunderlying Shares percentage of

interested under the total issuedName of the Shareholder equity derivatives share capital

(%)

CCT Telecom (Note) 374,000,000 0.57

Note: The interest disclosed represents long positions in the outstanding 374,000,000 underlying Shares which may beacquired by CCT Telecom upon the exercise of the put options granted by CCT Telecom to Deutsche Bank AGin relation to the sale of 13,800,000,000 Shares under the terms of the put agreement entered into between CCTTelecom and Deutsche Bank AG on 17 March 2006.

Save as disclosed above, as at 30 June 2007, there were no other persons who had an interest orshort position in the Shares or underlying Shares which would fall to be disclosed to the Companyunder the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in theregister required to be kept by the Company under section 336 of the SFO.

s h a r e o p t i o n s c h e m e

36

The current Share Option Scheme was effective on 7 November 2002. Unless otherwise cancelledor amended, the Share Option Scheme will remain in force for a period of 10 years from the dateof its adoption. As at 30 June 2007, there were 513,000,000 share options outstanding under theShare Option Scheme. Based on these outstanding share options, the total number of Sharesavailable for issue is 513,000,000, which represents approximately 0.78% of the total issued sharecapital of the Company as at the date of the 2007 Interim Report.

Details of the movements of the share options under the Share Option Scheme during the periodwere as follows:

Number of the share options Price of the Shares

Outstanding Lapsed/ Outstanding Exercise At grant At exerciseas at Granted Exercised Cancelled as at Date of Exercise price date of the date of the

Name or category 1 January during the during the during the 30 June grant of the period of the per Share share options share optionsof the participant 2007 period period period 2007 share options share options (Note 1) (Note 2) (Note 3)

HK$ HK$ HK$

Executive DirectorsMak Shiu Tong, Clement — 120,000,000 (120,000,000) — — 8/6/2007 8/6/2007– 0.055 0.054 0.071

7/12/2007Cheng Yuk Ching, Flora — 120,000,000 (120,000,000) — — 8/6/2007 8/6/2007– 0.055 0.054 0.071

7/12/2007Tam Ngai Hung, Terry — 120,000,000 (120,000,000) — — 8/6/2007 8/6/2007– 0.055 0.054 0.075

7/12/2007Li Man To, Feynman — 120,000,000 (120,000,000) — — 8/6/2007 8/6/2007– 0.055 0.054 0.075

7/12/2007William Donald Putt — 10,000,000 — — 10,000,000 8/6/2007 8/6/2007– 0.055 0.054 N/A

7/12/2007

— 490,000,000 (480,000,000) — 10,000,000

Independent non-executiveDirectors

Chow Siu Ngor — 10,000,000 — — 10,000,000 8/6/2007 8/6/2007– 0.055 0.054 N/A7/12/2007

Lau Ho Kit, Ivan — 10,000,000 — — 10,000,000 8/6/2007 8/6/2007– 0.055 0.054 N/A7/12/2007

Chen Li — 10,000,000 — — 10,000,000 8/6/2007 8/6/2007– 0.055 0.054 N/A7/12/2007

— 30,000,000 — — 30,000,000

OthersIn aggregate — 1,030,000,000 (557,000,000) — 473,000,000 8/6/2007 8/6/2007– 0.055 0.054 0.073

7/12/2007

— 1,030,000,000 (557,000,000) — 473,000,000

— 1,550,000,000 (1,037,000,000) — 513,000,000

s h a r e o p t i o n s c h e m e


Notes:

1. The exercise price of the share options is subject to adjustment(s) in the case of rights or bonus share issues, or othersimilar changes in the share capital of the Company.

2. The price of the Shares as at the date of grant of the share options is the closing price of the Shares as listed on the StockExchange on the trading day immediately before the date on which the share options were granted.

3. The price of the Shares as at the date of exercise of the share options is the weighted average of the closing prices of theShares as listed on the Stock Exchange on the trading days immediately before the dates on which the share options wereexercised.

The Directors do not consider it appropriate to disclose a theoretical value of the share optionsgranted during the period because a number of factors crucial for the valuation cannot bedetermined. Accordingly, any valuation of the share options based on various speculativeassumptions would not be meaningful, but would be misleading to the Shareholders.

o t h e r i n f o r m a t i o n

38

PURCHASE, SALE OR REDEMPTION OF THE LISTED SHARES

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listedShares during the six months ended 30 June 2007.

COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCEPRACTICES

CORPORATE GOVERNANCE PRACTICES

In the opinion of the Directors, the Company has complied with the code provisions under theCode set out in Appendix 14 to the Listing Rules throughout the period for the six months ended30 June 2007, except for the following deviations from the code provisions of the Code:

Code Provision A.2.1

There is no separation of the roles of chairman and chief executive officer as set out in the codeprovision A.2.1.

Mr. Mak Shiu Tong, Clement currently assumes the roles of both the Chairman and the CEO. Mr.Mak has substantial experience and a firmly established reputation in the telecom industry that isessential to fulfilling the role of the Chairman. At the same time, Mr. Mak has the appropriatemanagement skills and business acumen that are the pre-requisites for assuming the role of theCEO in the day-to-day management of the Group. The Board is composed of five executivedirectors (including the Chairman) and three INEDs with a balance of skills and experienceappropriate for the requirements of the Group. Furthermore, the roles of the managing director andthe general managers of the Company’s major operating subsidiaries are performed by otherindividuals. The Board believes that there is no need to segregate the roles of the Chairman andthe CEO as the balance of power and authority is already ensured by the current structure. TheBoard does not believe that the separation of the roles of the Chairman and the CEO will improvethe corporate performance.


The code provision A.4.1 provides that non-executive directors should be appointed for a specificterm, subject to re-election.



None of the existing INEDs of the Company is appointed for a specific term. However, all INEDsof the Company are subject to retirement by rotation and re-election at least once every three yearsat the AGM of the Company in accordance with the bye-laws of the Company.


The code provision A.4.2 provides that all directors appointed to fill a casual vacancy should besubject to election by the shareholders at the first general meeting after their appointment. Everydirector, including those appointed for a specific term, should be subject to retirement by rotationat least once every three years.

In accordance with the bye-laws of the Company, any Director appointed to fill a casual vacancyshall hold office only until the next following AGM of the Company and shall then be eligible forre-election. The Board considers that such a deviation is not material as casual vacancy seldomhappens and duration between appointment to fill casual vacancy and the immediate followingAGM of the Company is less than one year and is considered to be short.

Pursuant to the bye-laws of the Company, the Chairman and the managing Director shall not besubject to retirement by rotation or also not be taken into account in determining the number ofDirectors to retire in each year. The Board considers that the continuity of the Chairman and hisleadership will be essential for the stability of the key management of the Board. On the otherhand, the Board will ensure that the Directors other than the Chairman will rotate at least onceevery three years in order to comply with the code provision A.4.2.

Other information on the corporate governance practices of the Company has been disclosed in thecorporate governance report contained in the 2006 Annual Report of the Company issued in April2007.

AUDIT COMMITTEE

The Company has established the Audit Committee with specific written terms of referenceformulated in accordance with the requirements of the Listing Rules. The Audit Committeeconsists of three members comprising three INEDs, namely Mr. Lau Ho Kit, Ivan, Mr. Chow SiuNgor and Mr. Chen Li, one of whom is a qualified accountant and has extensive experience inaccounting and financial matters. The Audit Committee is chaired by an INED who is subject torotation each year.

The Audit Committee has reviewed the unaudited interim results of the Group for the six monthsended 30 June 2007 and the 2007 Interim Report of the Company.

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REMUNERATION COMMITTEE

The Company has established the Remuneration Committee with specific written terms ofreference in line with the code provisions under the Code. The Remuneration Committee consistsof five members comprising three INEDs, namely Mr. Lau Ho Kit, Ivan, Mr. Chow Siu Ngor andMr. Chen Li, and two executive Directors, namely Mr. Mak Shiu Tong, Clement and Mr. TamNgai Hung, Terry. The Remuneration Committee is chaired by an INED who is subject to rotationeach year.

MODEL CODE FOR SECURITIES TRANSACTIONS BY THE DIRECTORS

The Company has adopted its code of conduct regarding the securities transactions by theDirectors on terms no less exacting than the required standard set out in the Model Code containedin Appendix 10 to the Listing Rules. Having made specific enquiry of all Directors, theyconfirmed that they have complied with the required standard set out in the Model Code adoptedby the Company throughout the period for the six months ended 30 June 2007.

INDEPENDENT NON-EXECUTIVE DIRECTORS

The Company has complied with Rules 3.10(1) and 3.10(2) of the Listing Rules relating to theappointment of a sufficient number of the INEDs and at least an INED with appropriateprofessional qualifications, or accounting or related financial management expertise throughoutthe period for the six months ended 30 June 2007. The Board comprises three INEDs, one ofwhom has accounting and financial expertise and brings strong independent judgement, knowledgeand experience to the Board.

BOARD OF DIRECTORS

As at the date of the 2007 Interim Report, the executive Directors are Mr. Mak Shiu Tong,Clement, Mr. Tam Ngai Hung, Terry, Ms. Cheng Yuk Ching, Flora, Mr. Li Man To, Feynman andDr. William Donald Putt and the INEDs of the Company are Mr. Chow Siu Ngor, Mr. Lau Ho Kit,Ivan and Mr. Chen Li.

By Order of the BoardMak Shiu Tong, ClementChairman

Hong Kong, 19 September 2007

g l o s s a r y o f t e r m s

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GENERAL TERMS

AGM Annual general meeting

Audit Committee The audit committee of the Company

Board The board of Directors

BVI British Virgin Islands

CCT Telecom CCT Telecom Holdings Limited, a company listed on the Main Board ofthe Stock Exchange, the ultimate holding company of the Company

CEO The chief executive officer of the Company

Chairman The chairman of the Company

Code The Code on Corporate Governance Practices under the Listing Rules

Company CCT Tech International Limited

DECT Digital enhanced cordless telephone

Director(s) The director(s) of the Company

Group The Company and its subsidiaries

HK or Hong Kong The Hong Kong Special Administrative Region of PRC

HK$ Hong Kong dollar(s), the lawful currency of Hong Kong

INED(s) Independent non-executive director(s)

Listing Rules The Rules Governing the Listing of Securities on the Stock Exchange

Model Code The Model Code for Securities Transactions by Directors of ListedIssuers under the Listing Rules

N/A Not applicable



ODM Original design manufacturing

Percentage Ratios The assets ratio, the profits ratio, the revenue ratio, the considerationratio and the equity capital ratio as defined under Rule 14.07 of theListing Rules

PRC The People’s Republic of China

Remuneration The remuneration committee of the CompanyCommittee

RMB Renminbi, the lawful currency of PRC

R&D Research and development

Scheme of Scheme of arrangement under section 99 of the Companies Act 1981 ofArrangement Bermuda (as amended)

SFO The Securities and Futures Ordinance (Chapter 571 of the Laws of HongKong)

Share(s) The ordinary share(s) of HK$0.01 each in the share capital of theCompany

Shareholder(s) Holder(s) of the Share(s)

Share Option Scheme A share option scheme adopted by the Company on 17 September 2002and took effect on 7 November 2002

SOHO Small office and home office

Stock Exchange The Stock Exchange of Hong Kong Limited

Tradeeasy Tradeeasy Holdings Limited, a company listed on the Growth EnterpriseMarket of the Stock Exchange, a fellow subsidiary of the Company

US The United States of America

US$ United States dollar(s), the lawful currency of US

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VoIP Voice over Internet Protocol

Wi-Fi Wireless Fidelity, a technology of wireless local area networks (WLAN)based on the IEEE802.11 specifications

% Per cent

FINANCIAL TERMS

Gearing Ratio Total borrowings (representing bank & other borrowings, convertiblenotes and finance lease payable) divided by total capital employed (i.e.total Shareholders’ fund plus total borrowings)

Earnings/(Loss) Profit/(Loss) attributable to the Shareholders divided by weightedPer Share average number of Shares in issue during the period

Current Ratio Current assets divided by current liabilities

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00. IFC (p1-2) 87739 chairman’s letter CCT Tech International Limited 3 FINANCIAL HIGHLIGHTS Six...

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Transcript of 00. IFC (p1-2) 87739 chairman’s letter CCT Tech International Limited 3 FINANCIAL HIGHLIGHTS Six...